Nick Roberts
Mrs. Straub
AP Econ
24 September 2015
Outsourcing
One of the more controversial issues talked about in the world of economics recently is outsourcing. Outsourcing has cost the workforce of the US several million jobs since 2000. General Electric recently added to this ever escalating number by laying off 500 people and outsourcing those jobs overseas. There are several reasons as to why companies outsource their jobs to other countries, like cheaper labor, access to different resources, etc. Because of these benefits, companies are able to produce far past their production possibility curve. Due to the success of these companies, the trend of outsourcing American jobs will continue far into the future.
Early signs of outsourcing could be traced into the late 1980’s. However, they were outsourcing jobs for different reasons -- they were incapable of producing the necessary products on there own. Today, companies instead look towards the financial advantages of outsourcing. Many people ask why big companies like Apple outsource jobs, rather than help boost the American Economy. They do have a point though. If Apple were to bring all of their outsourced jobs back to the US, 700,000 jobs would be added to the American workforce, significantly reducing the unemployment rate. Also this would put more money in the hands of Americans, increasing their income, and allowing them to help the economy. But if you look at it from a company's standpoint, there are incredible rewards for outsourcing. The average minimum wage for the US is $7.25 an hour compared to China’s mere $.80 an hour. The company would save over $250 per person working 40 hours a week. Then multiply that by the 700,000 jobs Apple outsources to China and they would save over 1.8 million dollars. Similarly there are very little regulations put on companies in China, which would also shift the supply curve to the right. Another huge opportunity gained by Apple outsourcing jobs is access to different materials.
One of the most talked about issues of Apple products was the screen breaking. To combat this issue, Apple created a contract with a company called Corning who was willing to work with Apple for less than any other US company could. Not to mention that they also had developed glass that could withstand more abuse than those US companies’ glass could. This further shifted the demand and supply curve to the right, allowing Apple to produce more and consumers were happier with their purchased produces.
Finally, the company that Apple manufactures from in China, Foxconn, alone has 300,000 technical engineers working for them, which is over double the technical engineers that the US has. China, from a technological standpoint, is far superior tha the US. Because of this Apple is able to have more skilled workers developing their products which reduces the amount of errors in the development of their products and gives them access to better technology than the US could. In addition, jobs in these companies in China ae in high demand, getting 500 applications per day, which allows these companies to hire the best people possible which would allow Apple to produce at an efficient point on their production possibility curve.
All in all, outsourcing may take away from the American workforce, but it also greatly helps the company who outsources these jobs. With everything taken into account, outsourcing helps Apple save over 9 billion dollars. This money saved can be put towards research and development into more of the everyday products used in society today. Outsourcing may seem on the surface as a terrible idea, but by delving deeper into the core of outsourcing one can see that the positives heavily outweigh the negatives, resulting in a trend that does not seem to be ending any time soon.
Works Cited
Handfield, Robert, Ph. D. "Current Trends in Production Labor Sourcing." A Brief History of
Outsourcing. NC State University, 01 June 2006. Web. 04 Oct. 2015.
Mathews, Ben, and Kris Bendrick. "Why Apple Outsources Jobs to Other Countries (Or Anyone).
"YouTube, 09 May 2013. Web. 04 Oct. 2015.
Thompson, Mary. "General Electric Shipping 500 Jobs Overseas." CNBC. N.p., 15 Sept. 2015.
Web. 04 Oct. 2015.
Even though outsourcing might take away certain jobs wouldn't the extra money that is beings saved help the economy. The money can be used to create new jobs that can be done here. Outsourcing might hurt in the short term but the money that is left over saved can be used for things that weren't possible while paying American factory workers. So certain people might lose their jobs but it should create new jobs for others which doesn't sound fair, but its never about being fair.
ReplyDeleteAnother way to look at it, is when apple saves money they don't have to charge a even higher amount when selling us the product. So therefore, we also save money.
ReplyDeleteNick!! You looked like you've done your research for this blog post. You had great evidence and provided substantial evidence to make your point collectively stronger. You utilized appropriate vocabulary words such as production possibilities curve, supply, demand and income. You demonstrated fully that you know what they mean to economics. I understand that outsourcing may decrease employment rates but would the money being saved benefit our economy positively? You also demonstrated the pros and cons of outsourcing, for example you allow us to see how it is beneficial for big corporations like Apple to continue outsourcing since they are capable of production on their own. My only question is, is outsourcing doing more harm to us than good or vice versa???
ReplyDeleteIn my opinion, the outsourcing of jobs is a big problem for the economy in the US. It is interesting to look at the effects it has, however. I think it is more so a negative issue because it reduces the job opportunity for the average US citizen. However, the corporations who are outsourcing are making more money, paying more taxes. This means the government has more money to use to create jobs here. So overall big corps are able to produce goods more efficiently and some jobs are created. However, until the government is able to create enough jobs, outsourcing will still be a problem in our economy.
ReplyDeleteYou clearly did a lot of research on this project, showing the positive and negative effects of outsourcing jobs. I believe outsourcing is a major problem for the US Economy given that it takes away potential jobs in our own country and creates them elsewhere just so a company that is already extremely prosperous can gain even more money for the greedy higher ups. It does make products cheaper for the american consumer, but I do not believe it is worth the cost of becoming a lazy nation that buys it's own products from another nation we are already indebted to just so every 5 year old can have an iphone.
ReplyDeleteHey Nick,
ReplyDeleteGreat post! I've never looked at outsourcing in that way before. There's been a large move of manufacturing jobs in general to less developed countries. As you mentioned though, this is negatively impacting the economy, causing a loss of many blue-collar jobs. This changes the outlook for the job market that what it was 30-40 years ago, with many more jobs requiring a college degree. Again, good post!
Hey Nick I enjoyed the post and the points you made. I don't understand why people always are surprised when jobs are outsourced. Its just something a company does to expand and grow their business. Key word "their" business, they can do almost whatever they want because its there. Maybe a cool point to add to the post would have been a fact about how outsourcing jobs allows companies to lower the price of products if it does at all. Thank you -Tyler Hull
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